Bonita & Pharoah Fabricators produces commemorative bricks that organizations use for fundraising projects. David Bonita, the company's vice president of marketing, has prepared the following sales forecast for the first six months of the coming year. The company plans to sell the bricks for $24 each. January February March April May June 25,000 28,000 32,000 34,000 26,000 35,000 Bonita & Hill Fabricators' marketing department has identified the following monthly expenses that will be needed to support the company's sales and administrative functions. Depreciation $12,000 Sales staff salaries $29,000 Advertising $2,200 Executive salaries $36,000 Miscellaneous $1,700 In addition to these monthly expenses, the company will pay a commission to its salespeople equal to 8% of the sales revenue from each brick sold. The company expects bad debt expense to be 2% of sales revenue. Prepare Bonita & Hill's selling and administrative expense budget for the first quarter of the coming year.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Bonita & Pharoah Fabricators produces commemorative bricks that organizations use for fundraising projects. David Bonita, the company's vice president of marketing, has prepared the following sales
|
January
|
February
|
March
|
April
|
May
|
June
|
|||||
|---|---|---|---|---|---|---|---|---|---|---|
|
25,000 |
28,000 |
32,000 |
34,000 |
26,000 |
35,000 |
Bonita & Hill Fabricators' marketing department has identified the following monthly expenses that will be needed to support the company's sales and administrative functions.
|
|
$12,000 |
|
|
Sales staff salaries |
$29,000 |
|
|
Advertising |
$2,200 |
|
|
Executive salaries |
$36,000 |
|
|
Miscellaneous |
$1,700 |
In addition to these monthly expenses, the company will pay a commission to its salespeople equal to 8% of the sales revenue from each brick sold. The company expects
Prepare Bonita & Hill's selling and administrative expense budget for the first quarter of the coming year.
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